British Ask What a War Would Mean For Business

By ALAN COWELL

Published: March 18, 2003

LONDON, March 17—
A satirical skit on British television depicted Queen Elizabeth II questioning Prime Minister Tony Blair about the money the United States was prepared to pay to win support for war in Iraq. Mr. Blair spoke of billions going to other countries. But how much, the mock-Queen wanted to know, would Britain get? ''Er, nothing, ma'am,'' came the reply.

The skit was not far from the mark in reflecting unease among businesspeople here about plans for postwar reconstruction in Iraq and the prospect that British companies would be left out, despite Britain's military commitment to disarming Saddam Hussein.

Britain has sent more than 40,000 soldiers to join the 200,000-plus American troops massed for an invasion of Iraq, making Britain by far the biggest non-American military player. News reports here have suggested that British forces would be assigned to protect oil fields in southern Iraq and to hold the city of Basra while American forces move north to the capital.

Last week, however, several British executives said they were surprised to learn that the United States Agency for International Development had sought bids from American companies for $900 million worth of building contracts in postwar Iraq.

Representatives from 15 British companies, including BP and Shell, met with government officials in London last Tuesday to find out where British companies were likely to stand. The group also included AMEC, an oil and gas engineering company that participated in the clearing of ground zero in New York and the rebuilding of the Pentagon after the attacks of Sept. 11, 2001. Since the meeting last week, scores of other companies have registered interest in reconstruction contracts, government officials said, but they have received no guarantees.

There was ''a lot of speculation about U.S. contracts, so British companies came to us,'' said a spokesman for the Department of Trade and Industry. ''But until the situation changes, we can't promise them anything.''

''The Americans have been much more forward on this because their objectives have been different,'' the spokesman said, speaking in return for anonymity. ''What we are saying at the moment is that until the first shot is fired, we cannot speculate about what will happen after that.''

Britain's official reticence about the post-Hussein era, he suggested, reflected the government's reluctance in recent weeks to acknowledge openly that its war aims went beyond the disarmament of Mr. Hussein to envision his removal.

By contrast, the United States Agency for International Development said it had already solicited bids for contracts to rebuild seaports, airports, schools, hospitals and other facilities from American companies including the Bechtel Group and Fluor. A unit of Halliburton, the company run by Vice President Dick Cheney from 1995 to 2000, was also reported to be in the bidding.

The Bush administration's apparent intention to limit the contracts to American bidders has unsettled competitors in other countries. And Derek Simpson, a British labor union leader, said there were grave concerns in Britain about the American attitude toward British companies and workers, who he said could readily compete for reconstruction contracts if given the chance.

Moreover, the British government -- which has been Washington's most steadfast ally -- has said that the United Nations must be involved in reconstruction efforts, even if it plays no role in military operations. And Chris Patten, the European Union's foreign affairs commissioner, has told Washington that Europe would find it difficult to help finance postwar rebuilding without United Nations approval.

''It will be that much more difficult for the European Union to cooperate fully and on a large scale -- also in the longer-term reconstruction process -- if events unfold without proper U.N. cover,'' Mr. Patten said, calling the solicitation of bids exclusively from American companies ''exceptionally maladroit.''

The work that most interests British businesses is infrastructure repair, fixing not just battle damage to bridges, railroads, power lines and the like but also years of neglect.

If retreating Iraqi forces set fire to oil fields, as they did in Kuwait in 1991, specialist fire-fighting concerns will be called in. Most such companies are based in Houston, but AMEC, the British firm that helped rebuild the Pentagon, also fought oil well fires in Kuwait.

John Hillsden, a spokesman for the Institute of Civil Engineers in Britain, said there had been ''no assurances or guarantees'' that British companies would get postwar reconstruction contracts, but ''civil engineering is a global industry, and contractors work together,'' so there was a good chance that British companies would at least get subcontracts. ''That's the way it generally works, and the way it will work this time,'' Mr. Hillsden said.

Royal Dutch/Shell and BP have both sought to play down their interest in lobbying for postwar contracts, beyond arguing that they should not be discriminated against.

''There must be a level playing field for oil companies to get in there,'' Lord Browne, the chief executive of BP, said late last year. His remarks were echoed by a Shell spokesman last week.

Oil companies are also trying to dispel expectations of an automatic oil bonanza to be had in Iraq, whose oil reserves rank second only to Saudi Arabia. ''There's this idea that oil companies are going to walk into Iraq, but based on history there's a feeling that it is not going to be like that,'' one oil executive said. ''After the last gulf war, everybody said there'd be contracts in Kuwait, but that hasn't happened.''

Unless Iraq planned to step up production far beyond the 2.5 millions barrels a day that it now pumps, the executive said, the bulk of the reconstruction work would be for engineering companies rather than oil companies.

''If sanctions are lifted and the Iraqi government says it wants foreign investment in the oil fields, then the oil companies will consider the opportunities as and when they arise,'' the executive said.